Members Beware: Home May Be Subject To Lien For Nursing Home Costs

MAY 2004
- During the budget crisis last year, changes were made in the Medicaid
law that expanded the state's power to recoup its cost for nursing home
care - a practice known as "estate recovery". Consequently, members,
whose homes were exempt from estate recovery, may find that this is no
longer the case and their home may be subject to a lien.

July 1, 2003, the state could only recover from assets, like a home,
that passed through a member's probate estate. Generally speaking, the
probate estate would include assets solely in the individual's name and
not those owned jointly or with a designated surviving beneficiary
(i.e., life insurance, Option B and C pensions).

member could feel secure that, as long as the family homestead was not
in his name alone, then it would not have to be sold to pay back
Medicaid for nursing home care. However, that changed when last year's
budget became law effective July 1, 2003. Beginning with nursing home
residents who die on or after that date, the state can collect from any
interest that a member had, immediately before their death, even if the
asset is not included as part of his probate estate (section 329 of
chapter 26 of the acts of 2003).

this means that property, like a home owned jointly with a spouse or in
which a member may have retained a life estate, is no longer exempt. It
may be subject, then or sometime in the future, to estate recovery by
the state for its share of their nursing home costs.

to the Association's Bill Hill, "If the nursing home resident is
survived by a spouse or a disabled child, then the house will not be
sold as long as they're living. But once they die, it can then be sold
and part or all of the proceeds can be taken by the state towards the
nursing home bill."

Legislation is
pending that would eliminate the new law entirely (i.e., SB 2232) or
reduce its overall impact (i.e., SB 2173). Unless and until that's
done, members should be mindful of the new law as they plan their
estate and make arrangements for possible long-term care.